Consumer spending rose by 0.2% in November
After more than three years of steady price increases, they fell last month for the first time since April 2020, according to a closely watched report released Friday by the Commerce Department.
The Personal Consumption Expenditure (PCE)—a measure of prices households pay for goods and services—closely monitored by the Federal Reserve, declined 0.1% in November, bringing the annual inflation rate to 2.6% from the month before.
As inflation slowed further in November and consumer spending continued to outpace expectations, a soft landing to bring down inflation through rate hikes while not throttling the economy into a recession seems possible.
According to the report, a drop in gas prices contributed to the decline. Core PCE prices, which exclude energy and food costs, cooled to 3.2% for the year ended in November, a step closer to the Fed’s 2% target.
Consumer spending, a key economic driver, rose by 0.2% in November and 0.3% after adjusting for inflation. Though the readings suggest positive growth, it is not as hot as it was earlier.
The University of Michigan’s consumer sentiment measure rose by 14% in December from the previous month, reaching a five-month high.